White Mountains Insurance is planning to enter the European reinsurance market in a deal that will take Swiss-Swedish engineering and systems group, ABB, out of mainstream financial services, revealed a report.
It said White Mountains had agreed in principle to pay £240m for Sirius, a reinsurance company based in Sweden owned by ABB.
Sirius has recorded losses for the past two years, and the report said it now looked likely to miss its stated objective of breaking even for the 2003 year of account.
White Mountains, a US insurer based in Bermuda, has a history of revitalising ailing insurance companies.
According to the report, the agreed price of £240m was far lower than some Swiss analysts had predicted Sirius to fetch.
ABB reported a £450m loss for the 2002 year of account, said the report. This was partly to fund a settlement of asbestos-related claims on Combustion Engineering, its US subsidiary.
As part of a £2bn share and loan refinancing, ABB is halving its size and concentrating on its main business. It has already sold most of its financial services subsidiaries, said the report.
